tv Mark Skousen The Structure of Production CSPAN October 8, 2017 5:47pm-6:21pm EDT
>> introducing you to run to procure and author and economist of freedom of fest where we are in las vegas. >> this is the intellectual piece of the entertainment capital of the world of the former mayor said this is the most unique event in las vegas because usually it is just about fluff and entertainment that we are add a read his son's gathering with history science and technology healthy living with music and dance and liberal arts education. we have over 300 speakers and many authors one of the
subtitles is great thinkers we're the few organization we sell people hundreds of books so we are delighted to have booktv here as part of freedom of press. >> what is the of political philosophy?. >> no doubt we attract a libertarian conservative audience. it is hard to pinpoint politically investors two years had donald trump he appeared it was his lucky day the poll numbers were down and the media coverage was just incredible but what
struck me was the audience response i expected to be pure libertarian with serious reservations about what he said about immigrants and mexicans libertarians tend to be more open-minded but at least half of the audience gave him a standing ovation and i was in shock. we have the eclectic audience and we like to do a lot of debate we had paul krugman two years ago and clubman convince quite a few people to change their mind. i don't like to think of ourselves and a political way to discourage using the terms left and right because these are divisive for smearing people you don't
like. to discourage talking about each other it isn't the new is right but what is the solution to our problems or these are the democrats? the we're in a health care crisis and we have several sessions on health craze -- health care. we a serious problems we were resolved. >> we talked to an offer yesterday as a classic liberal economist. >> no. classical liberal would be adam smith and paul krugman is a keynesian.
progress and should be more in the of milton friedman camp. >> we had him here to debate more and as an interesting person his background is a classical economics but right team a biography and to live in santa barbara. bin did favor of a progressive tax and milton friedman and hayak were sceptical as i am.
the id yet to transfer wealth from the private sector to the public sector and i cannot see how that would be beneficial. and the prism of how he sees things. so with no central planners. >> then a $20 bill with jackson on net $3 that is the cost of production but with a $100 bill the same thing it is $3 but $1 bill
is $0.3. people reing of liberty bell , eight times they have been to freedom fest. obviously you'd want to print $100 you get more bang for the book the the discipline is gold. >> real gold?. >> it is mexican n50 peso. >> this is worth $1,500 or a little more so i keep this on me despite donald trump because it is mexican.
[laughter] >> are you not a fan of the current president?. >> no. i think mike pence would be a better choice. i like some of the things he has done to shake up the system but negative comments on immigration and trade are out of the mainstream with baggy eternal truth no country was ever ruined by trade so you have individuals who have lost jobs but hopefully they discover new jobs and most have. as a believer in building bridges over walls. >> is nafta a good system?. >> absolutely anything that reduces barriers between countries is beneficial.
this myopic view of america first fed to make sense militarily but quoting ben franklin the policy of america is commerce with all anwr with nunn that is very idealistic on the trade side open borders is a superior policy to buy american products first know. let people decide that is less freedom fest is all about. and not imposing your view if you want to buy american that's fine but don't tell other people. >> bringing manufacturing back to the united states?
the news that it economically viable? at chapman univ. a show my students all the manufacturing products americans still produce and export. very much with manufacturing coming due turbines and automobiles all kinds of scientific instruments. it is fun to go down the list of all the things america produces. even oriole. we also export oil. the idea that manufacturing has died in america is a myth it is true our government has imposed a lot
that government has to be active that you don't just sit there and see that it will all come together. do they get overregulated and so the factory owners moved out. i think there was an element of that. we've a fairly free trade environment. for the automobile industry. these cheap labor produced products with good technology were able to find a market in the united states and that decimated the clothing industry. let's not sugarcoat the problems that we have. we did lose jobs and so on. labor and capital in the factors of production.
when the demand drops what can you do. what are the alternatives. they just sit idle. but labor can become temporarily unemployed. you can be retrained. a new education. you can go back to school all of us the have of genius unemployment can disappear fairly quickly if we are quick enough to be trained and reeducate our people. some of the issues that we heard about this past campaign income inequality shrinking middle class are those serious concerns in your view. they moved to the upper middle class.
but if they drop down that could be a problem. you have to be very careful with income and wage statistics. i focus on quantity, quality and variety. with the goods and services. people say wages have stagnated for 20 years. is that true for quantity quality in drive. rather dramatically. and we had people using products that they didn't had 20 years before. and you people doing away with products that they have now. there is a dynamic that is going on in the economy is very positive and i think the standard of living is rising even have wages may be stagnant. the mac they write about the accomplishments and economics
the contributions to economics and he talks about a term called a gross gross output. what is that. this is kind of my big think can of the big thing that has happened. and since the 1940s we had used one statistic to measure the economy gross domestic product. there is a lot of misconceptions about what that is. it turns out when they decided to use that as a measure of the economy that they were only measuring final output. so clothing, suits, drinks and watches. the pain you head in your hand. that's all counted in gdp. the supply chain. and all of the stages of production in the intermediate
stages. what is behind the grocery store all of the work and effort not counted in gdp is left out. so the supply chain is left out in gdp. and this is a real shock to most people that what we had is a narrow view of what the economy is. it turns out the supply chain is bigger than gdp itself. because there is a lot of buying and selling as you move in the production process along. and it turns out it is a huge sector in the economy in fact retail sales is only 20% of employment. most people are employed in the manufacturing the stage and the wholesale stage in the mining status and so forth so gross output is my measure.
i wrote a book called the structure of production. as an academic book. i was recently updated as well. the third addition why. they are the ones that put out quarterly gdp statistics. i have some influence there. they now decided to publish gross output i can look at it like top line and bottom line. if you take an accounting course or if you are familiar with finance and wall street when they come out with earnings its earnings report. there is a top line and about a mine. his total sales revenue and the bottom line is profits or earnings. every publicly traded company when they release these quarterly reports have the top
line in the bottom line. no analyst would be worth that if they didn't look at both. as i had advocated we need the same top line bottom line for national income accounting what is gross output. it measures spending and all stages of production. all along the way and they just released the first quarter 2017 gross output statistics today. it turns out to be about $41 trillion. i have to adjust that statistic a little bit. the government does not include that. there be some wholesale and resale trade.
so the gross output have the top line or bottom. or more like the profit. it does include some other aspects. that is the idea. assists here in the 21st century the economists have finally caught up with accounting and finance which have been doing this for years and now we have topline and bottom-line accounting and they don't come at the same time. they said dislike the financial they will have every
quarter. i do get is a real breakthrough. i think one of the reasons this is an important statistic is because with gdp as a measure of the economy. what is the biggest sector of the economy. what is the most important sector. it represents 70% of gdp. it is the consumer that drives the economy. consumer spending is the effect that the cause of prosperity. the cause of prosperity and innovation. its capital investment. it is the supply chain. it is kind of a supply side. we were own statistic now. gdp is more on demand.
the supply chain it turns out the business spending as a percentage of gross output is 60% of the economy. that business spending is the elephant in the room. consumer spending is 30% of the economy not 70% they measure spending all activity not just a final output. i hope that's pretty clear. they get it just like that. the economist they are a little slow. but they are finally getting it. in a sentence or two what does that supply-siders believe. what does that supply-siders believe. they believe that the key to prosperity is innovation entrepreneurship savings with
the frugality. quoted him 70 --dash several times. there is three virtues that if you adopt these you can be successful in life personally as a family as a business and as a nation those three principles our industry. prudent behavior. if you work hard and you are productive but you don't waste your money you are frugal and you're your thrifty in you live within your means and if you are prudent with your investments and your spending patterns you can't help but be successful as an individual as a business and as a family. and as a nation. this is an adam smith ben
franklin unfortunately we've lost that supply side view and now it's more consumer spending. in the more consumer spending the more debt you go into the better off you are. we've shifted away from these traditional views which i espoused which i think is more that way. i think the idea. we have learned a lot about how we deal with recessions but during the recovery in during normal times of economic growth we need to encourage industry and prudence. in sadly. a lot of irresponsible spending going on. all economists agree we should have a balanced budget but even during bush's era he
never ran a surplus he never did except maybe the first year. he inherited it from bill clinton the democrat. and then obama didn't really improve matters that much either. we deliver within our means. government needs to be encouraging entrepreneurship. and you don't do it by dodd frank and obama care which provides layers and layers of bureaucracy it's just mind boggling. not a single community bank has been created since dodd frank was passed in 2010. there used to be dozens of community banks providing benefits to local communities not a single one is being created. i'm set i'm not familiar with that statistic. he should be. some leap picks up the structure of production and is
not an economist will they understand this book will they understand this book i think they would understand the introduction. but the book is fairly heavy. it is an academic work. it is meant to be written to economist has been the strategy all along. you have to convince the heart and soul and the mind of the economist of your own discipline before you reach out to the general public. on my website every quarter i do a press release so we will have one that will come out soon. is it written in layman's terms gross by the way. here's the other thing that's interesting. when gross output is growing faster than gdp as a positive sign and that the economy is doing really well. when it is falling faster than
gdp that is a is a sign you're in big trouble. you're heading for recession. in the last couple of years house -- output has been growing faster. i am 100% invested in the market even at these levels because the economy is recovering and it has been during the entire obama administration. it was going faster than gdp. in that time that i look for. it starts dropping or does not go as fast they were in trouble. that was the supply chain telling us we better be careful or we can celebrate those who have said it slowing down here they've been seen recently. but look at gross output. it's actually growing in faster. i'm relatively optimistic.
and we had been talking with mark's cows and who is the founder of the author of this book. at the structure of a production. thank you for your time. the former president bill clinton recently shared his thoughts on what he calls the most important political book of the last decade. on what he calls the most important political book of the last decade. dean what the exhibit is at the clinton as evidential center right now. extreme bugs. they gave me two ant farms. why because i am always telling them that the most important political book that nobody read written in the last ten years that would've made us all much healthier as citizens is the social
context. they first taught me that the combined weight of all the ants on earth is greater than combined weight of all the people on earth. that's quite a number of ants. of all of the species that have ever inhabited our earth and we know there are hundreds of thousands of them. they are sadly disappearing now. the most successful species ever lived we had repeated
chances to be wiped out but they failed. here we are. and the most successful species are ants, termites, bees and people. they are the ones that have ever lived. they found ways to work together to solve common problems. we the conscience in consciousness. and we know it. it makes us arrogant and we think we are smarter than we are so we tend to slice and dice ourselves in ways that in the end threaten our ability
to escape when we are challenged. this climate change thing gives me a cake. no one doubts the questions because it is verifiable that more than 90% of the scientists say this is the x essential threat to our planet. so now the new thing is there say they are wrong. i'm just saying we just had the coldest march in new york in 100 and something years. i get it we can make all of these jokes you name it one other threat. name me one threat that you and take seriously if you thought the odds of doing bids
were more than 90%. there is a hundred% chance your child will survive a crash unless the car completely correct -- collapses. nobody would do that, right. you can watch the full discussion on her website. television for serious readers. you're watching book tv on c-span two. television for serious readers.
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